In Search of the Perfect Investment

Powell is bowing to pressure from the Administration to signal upcoming rate cuts.

His hints are buoying the stock market — at least for now.

This morning Joel Ross wrote:

Powell has pretty much said there is a rate cut in July. Unemployment is up .1 to 3.7%.  Watch next month. If it creeps up further to 3.9% over the next two months, then get very concerned. That would be a classic sign of a real slowdown ahead-an increase of 25 BPs in a three month period.  It is why the Fed will very likely cut 25BP in July, and then if unemployment rises further  in July, they might cut another 50BP in September  to try to forestall further increases in unemployment. They probably should have done  a cut in June to have an impact by fall as there is always a lag of several months between a Fed cut and impact.

The New York Times wrote:

The only way is down for the Fed
Jay Powell, the Fed chairman, strongly signaled yesterday that the Fed could cut interest rates when it meets later this month,

 The Fed expects unemployment to stay low and inflation to gradually rise, Mr. Powell told the House Financial Services Committee.

 But he added that “uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook.”

Investors saw the comments as a virtual guarantee of rate cuts. Stocks leapt yesterday, with the S&P 500 briefly trading above 3,000 for the first time. The index is up nearly 20 percent this year and is enjoying one of the longest bull markets on record.

That the Fed is considering a rate cut at a moment when the United States economy is strong and job market gains are solid underscores Mr. Powell and his colleagues’ concern about the future of a record economic expansion.

Can’t square a looming recession with surging stock prices? Let Mr. Matt Phillips of the NYTimes explain:

 Rate cuts “lower the returns on new investments in bonds, the main alternative to stocks for many investors. That makes stocks look more attractive to investors.”

 “A rate cut also makes it cheaper for consumers and companies to borrow, and that can buck up economic activity and help corporate profits.”

There’s one big uncertainty: how far cuts may have to go. Mr. Powell is “knee-deep into the relatively uncharted waters of easing monetary policy to nip possible economic damage in the bud rather than to tackle an actual slump,” James Politi and Colby Smith of the FT (Financial Times) write. “So the central bank risks a big backlash if it does not deliver the rate cuts that are baked into expectations.”

My advice:

If you have achieved extraordinary gains in something or things this year, please take a little off the table. Things are getting frothy.

Don’t buy retail stocks just because they’re “cheap.”

Who shops brick and mortar anymore?

If yo don’t believe me, talk a walk up and down New York swish Madison Avenue. This is what you’ll find on every block:

If you have a retail store, ask your landlord for a 50% rent reduction to stay.

It’s happening.

Don’t do stupid, again

+ Look both ways before crossing the one-way street. Bicyclists come from both directions and pay absolutely no attention to traffic rules. No biker stops at red lights, except in Norway.

+ Electric bicycles driven by messengers are three times heavier than normal bikes. One of these can do real damage to you pedestrian.

+Don’t walk behind taxis or Ubers. The drivers back up without looking.

+ If you’re feeling tired, pull over and sleep. Don’t drive tired. You can drive off bridges.

+ Hold the handrail and watch that final step, going down. It’s the most dangerous.

+ Above all, don’t stop moving. Try to work up a sweat. Biking will do it. Tennis will do it. Running will do it. Fast walking may. Whatever, just do it.

I continue to love my Apple Watch

Especially when I play tennis.

+ It lets me hang up on spam calls — without running over to my ringing iPhone.

+ It finds my iPhone.

+I can record notes to myself to pick up the milk and the eggs.

Friday on ESPN is the match of the year

A Long-Awaited Wimbledon Rematch: Roger Federer versus Rafael Nadal.

It will be their first meeting at Wimbledon since the 2008 final, which is considered one of the greatest matches in tennis history.

I’m guessing it will play EST morning. The time hasn’t been announced yet.

For more on the match and the rivalry., click here. 

Favorite recent New Yorker cartoons

Harry Newton, who finds throwing stuff out to be joyful. Anyone want dozens of used Pendaflex hanging files? Or hundreds of these stupid things. These are the only remains of many of my “brilliant” biotech and venture investments of 2005-2007.

The Pendaflexes and the clips got replaced by Fujitsu ScanSnap scanners. Ain’t technology fun?

Take the family somewhere nice to celebrate your recent stockmarket gains. I recommend Botswana. Safaris are the best family vacation ever. My partner is in Botswana with his entire family at present. He’s been there many times. Many of us can’t get enough of African safaris. I’m going back soon.